Go back five years and the stock is up 599%.
But over the last year the stock's march has slowed. It's up 39% in the past year. That's a pace many companies in the bank card business, like Visa (V) and MasterCard (MA), have managed to beat. (Visa's up 43%, and MasterCard 52% over the past year.) Even a merchant processor, Global Payments (GPN), has done better, up 53% for the past year.
It shouldn't be this way. American Express has a unique position in the credit market: it not only processes transactions, but it solicits merchants and issues cards.
In this game it's the bank, the dealer, the processor -- everything.
What CEO Kenneth Chenault and his board seem to have concluded is that it's the company's history as primarily a travel and entertainment company that is to blame for the poor performance.
So they're turning AmEx's consumer business into something more like a credit card bank.
Jettisoning half of the travel business in a $900 million deal with private bank Certares International and the Qatar Investment Authority is just the most visible piece of that strategy.
The company has also been going downmarket as fast as it can, making its customer base look more like that of a typical bank, and offering revolving credit rather than just a one-month allowance that companies are then expected to pay off in full.
What was business accounting has become bank accounting.
This now includes the Everyday Card, a no-annual-fee rewards credit card that will compete directly with Visa and MasterCard cards from Capital One (COF) and others. The card is rolling out with an ad campaign headlined by actress-writer Tina Fey, playing a multitasking mom.
You can see the company's change in strategy by comparing it to an earlier AmEx commercial, in which comedian Jerry Seinfeld ran around England learning the language for his act.
The message is clear. This card is for ordinary people. That card was for traveling businessmen.
AmEx also continues to offer a combined credit card/membership card through Costco (COST) called True Earnings, offering rebates at Costco stores. It can also be used wherever other AmEx cards are accepted. American Express is the only credit card the warehouse chain accepts in its U.S. stores. (My family has one.)
Amex figures it can make up ground in the credit card business because Discover Financial Services (DFS), which also runs its own issuing bank and merchant services, has been on quite a streak.
Over the last five years, Discover stock is up 823%; over the past year, it's up 30%. That's admirable growth.
But AmEx's real problem is market share. Satmetrix's latest NetPromoter Customer Loyalty Index shows Discover overtaking AmEx in the banking category for the first time.
Meanwhile, the travel business has changed. Companies like Priceline (PCLN) and Expedia (EXPE) now dominate, even in many parts of the business travel market, and getting back market share will take new investment that AmEx doesn't want to make.
Not when there are so many opportunities for a credit card bank.
At the time of publication the author owned shares in COST and GPN, but held no positions in any of the other stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.